Comment by anon7000
2 days ago
> the valorization of profit has blinded them to seeing the advantages of the public good as a worthy bottom line
This is, IMO, the critical line, and also one of the deepest problems in the world (and especially America).
A focus on profit is so frequently completely opposed to human wellbeing and a flourishing society. Just look at health insurance companies for a prime example: they make profit by denying claims. The result is a catastrophically expensive insurance bureaucracy and worse health outcomes. Not to mention the extreme stress any American feels when interacting with an insurance company over any meaningful amount of money. (Which I’ve experienced, and I have far better coverage than the average American.)
These companies are so clearly, obviously bad for human flourishing. But profit is great!
The incentives are so deeply messed up. Our economy only allows profit as an incentive, which works well when aligned with human wellbeing-being. But as the economy grows, companies consolidate, and profit growth is still expected, nearly every single sector looks for ways to cut costs. And with fewer competitors, it’s easier and easier for entrenched, powerful companies to raise prices and reduce quality with little consequence.
This is clearly bad for human flourishing. But profits are fantastic!
Just because profit is actually aligned with human flourishing in a couple sectors doesn’t mean the system as a whole will continue scaling effectively. It’s clearly not, and it must change to avoid completely suffocating us.
I would argue that greed is the problem, not profit.
One could argue that government policies are anything but altruistic. They fund public education because you need an educated workforce. They fund public health insurance because a healthy workforce is a productive workforce. You distribute the cost over the entire population. Both remove direct costs from employers (e.g. training and providing private health insurance). Both have a tendancy to reduce costs and improve consistency because you are working at a larger scale. It also creates order in society since people generally feel as though more of their needs are being met, and they feel less exploited. All of this contributes to profit both on a social scale and for individual businesses.
Somewhere along the line people forgot the lessons of the 20th century. They forgot that profit goes beyond a line on the current financial statement. It also reflects long term interests.
Human nature (greed) is never the problem, because it cannot be changed. Focus only on what can be changed. Design a system that manages human nature, pointing it in a direction that is beneficial, while taming its side effects.
A denial of human nature is how you get authoritarian socialism with centralized planning, which leads to catastrophe because of the local knowledge problem, and because people have no private incentive to do anything.
"Capitalism" is an incomplete first step towards a system which channels greed into something that's beneficial for all stakeholders. A profit-driven actor making their production more efficient to increase profits is a good thing for everyone.
But capitalism is incomplete because the profit-motive can become pathological. Market failures are commonplace.
The only solution that is proven to work is a mixed economy done right, with clever and lean regulations, and a government not influenced by money, and with the government stepping in occasionally to provide public goods that the market cannot, and with private actors otherwise free to make profits as long as they are not harming any third parties.
> Human nature (greed) is never the problem, because it cannot be changed. Focus only on what can be changed.
The statement might appear to be pedantically true, but it's not true in practice. Sure, greed cannot be eliminated, but you certainly have systems which control the actions which result from greed. In reality, the actions brought on by greed are the real problem and we have an entire branch of the US govt(the legislature) dedicated to setting up mechanisms(laws) to discourage unwanted actions via threat of consequences.
So, it's certainly possible to mitigate the effects of greed. What people are pointing out is that of late corporations(and more specifically the C suite) have faced few if any consequences for detrimental behaviour driven by greed.
Hence the problem.
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> centralized planning, which leads to catastrophe because of the local knowledge problem, and because people have no private incentive to do anything.
The local knowledge problem might have been an issue with central planning a few decades ago, but I don't think it is anymore. Everyone now has in their pocket a device with which they're able to instantly send any kind of information anywhere. We now have computers and software powerful enough to process all this information. The price mechanism is an ancient, inefficient and slow way to transmit information compared to what we could achieve today if we really wanted to.
People have all kinds of incentives other than profit. People wouldn't just lie down and die if they couldn't make money by owning things. The failures of past attemps at planning had more to do with the limited technology they had and the poor decision-making structure that centralized power and allowed too much corruption. That doesn't mean planning will always have that kind of a result.
> a government not influenced by money
This is impossible in capitalism, which will always over time create concentrations of capital large enough that influencing the people in government will become affordable, no matter how hard you make it. Government is just people, and there'll always be ways to influence people using money. In a well designed government it would be hard and expensive, but you can never make it impossible. Eventually a corporation or an individual will become so wealthy that they can afford it, and at some point conditions will arise where influencing the government will be a cheaper way to increase profits than fairly competing in the market.
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Who decides the clever and lean regulations? How do we maintain the best ones when power changes hands in government?
Human nature is not greed though. Human nature is very very varied and adaptive. And the historical norm of human nature is one of sharing, community and support, as much as such a claim can even be made. And human nature is subject to the whole bigger system in which it lives.
Capitalism is in many ways such a system, one that is built around driving the worst parts of human nature. And the thing is the profit motive becoming pathological is not a bug. This is the key defining feature of the system. Capitalism really isnt even about markets. Its about consumption, and producing things specifically to sell them in order to make some markup. The goal is specifically to find ways to make money, and stuff like fulfilling peoples needs, quality, workers rights, and regulations are clearly things that are getting in the way.
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> Human nature (greed) is never the problem, because it cannot be changed.
Citation needed.
>I would argue that greed is the problem, not profit.
I would point out that's precisely what the "private equity firm"--is that true or just a buzzword? no private equity group is taking this library private--is saying about the current library, that the greed of the unionized employees is running the library for their own benefit and at great cost to library and at the expense of the public, and it could be run more efficiently. So, you agree with them at least that much.
>Somewhere along the line people forgot the lessons of the 20th century. They forgot that profit goes beyond a line on the current financial statement.
huh? that wasn't "the lesson of the 20th century". if anything, the 20th century represents democracy and market capitalism's greatest joint achievement, with much less disease and starvation and much more freedom at the end vs the beginning.
you live in one of the greatest times to be alive, and all you can do is complain. when and where from the past would you rather live out your life expectancy of half what it is now, coupled with no HN to bitch on?
Totally agree. I think another angle to look at it is not "a couple sectors" but "a certain scale", as suggested by your remark about how companies consolidate. When businesses are small and need every customer, they are motivated to do a good job at what they do, build goodwill, protect their reputation. The larger they become, the more they tend to work against their customers rather than for them. They cross multiple markets, making them less responsive to the demands of any one. They become "too big to fail". And so on.
What we see in the modern era is a system in which success is defined as becoming large enough that your customers have no other option but to deal with you. That's not a healthy system.
You see that scale problem everywhere. Once a business has become large, it no longer cares about “small” costs like unused buildings. That’s basically the reason so many buildings in towns and cities can be left unused for decades.
The impact it has on that town is often huge. But for the business, it’s just a small overhead. A small landlord couldn’t afford to leave their asset unproductive. A multinational conglomerate can.
The death of local high streets is in part due to the unwillingness of landlords to actually rent their properties out for market rate.
I don't understand how massive corporations are both ruthless slash and burn cost-cutting profit optimizers and sloppy businessmen who don't care about the small things, even in aggregate.
What's the economics of not renting out high street retail properties? There must be millions of them across the first world, with a theoretical annual rent roll in the 11 or 12 figures. Are they owned by a million multinational conglomerates foregoing a hundred grand each? In that case we are stretching the definition of "multinational conglomerate". Or are they concentrated in the hands of the same hundred companies? In that case they are each missing out on ten billion a year in opportunity. There isn't a company in the world where you couldn't make your name as Head of Global Unused Property managing ten billion a year of revenue.
I don't have an answer for this either, but it must be more complicated than "they're all owned by multinationals who don't care about such small numbers" - the point of multinational companies is that those numbers are no longer small at scale.
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> Just look at health insurance companies for a prime example: they make profit by denying claims.
Ok but why do people pick those insurance companies?
We see this across the board too and not just insurance companies. Governments low to pick the lowest bidder who then has massive cost overruns which has to put them above the second lowest bid in the end. Why is counter party risk never accounted for?
> Ok but why do people pick those insurance companies?
Because they are bundled with their job and most people don't have a choice?
Does HR get their own health insurance?
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Health insurance isn’t a great example. Profits are capped relative to premium costs so denying claims isnt a good strategy.
The only way denying claims can become a profit booster is to deny enough that premiums can be lowered enough to bring over more new members than was lost in revenue through the premium discount.
So denied claims come from people shopping for the cheapest insurance coverage possible.
Is there a way to reward and incentivize improving human well being?
Perhaps a society where all income comes from the government in proportion to how much one improves the overall well being of society?
(Yes, it's difficult to measure this objectively, and even harder to agree on what the priorities for societal well being are)
Germany has a different structure for company ownership than the USA. Members representing relevant stakeholders (employees, the community, environment, etc.) must be present on the board and advocate for their interests.
UBI would go a long ways to enforcing democracy. Money talks, so just give people money. Everything else is too abstract. We can't seem to encode justice into law but at least if everyone got UBI it would be harder to oppress poor people
(half serious)
It’s not difficult, it’s impossible under freedom of religion and just independent thought generally.
One person’s “well being” might be measured by how many wives and children you have. Another’s might be education level and physical fitness. Another’s could be financial independence.
These all clash with each other in fundamentally incompatible ways.
> And with fewer competitors, it’s easier and easier for entrenched
so the problem isn't with profit after all, it's with low competition? So what is causing the lack of competition in the sector? Why can't that problem be fixed?
> A focus on profit is so frequently completely opposed to human wellbeing and a flourishing society.
Not surprising considering the profit is taken from people in the society.
Public-private "partnerships" backed by private equity will always raise prices, cut costs arbitrarily, reduce service, take out loans, and saddle the organization with debt to pay themselves huge dividends before driving it into bankruptcy. This is what happens when corrupt, unregulated capitalism is allowed to run amok and have zero skin in the game except to extract maximum profit like vampires.
how do we fight this?
There is even worse, genocide profiteers. [1]
[1] https://www.un.org/unispal/document/a-hrc-59-23-from-economy...
Conceptually neoliberal societys do not have a strong way to seperate community and social goals from economic ones, because their very philosophy is that prosperity creates social improvement.
Meanwhile everyone is living in low trust economic zones with no community observable, other than anonymous services.
this narrative is basically a lie
1) Americans spend less than OECD average out of pocket as a percentage of healthcare costs. This is much larger in absolute terms but the multiplier - cost of healthcare is nearly entirely due to provider costs.
2) Health outcomes are really different between states despite having basically the same system. demographically controlled iirc outcomes are not different and sometimes better (e.g. japanese americans).
3) Insurance company profits are pretty low relative to cost of healthcare. while the bureaucracy is more expensive its not "catastrophically" by any means and iirc there are oecd countries with similar overhead although im too lazy to search on myvphone.
4) Rationing healthcare has to and does happen in all advanced economies. again modulo cost in the us, id rather it happen via money than government or inforrmal scarcity (like in Canada).
4a) Frankly while i dont have evidence for this 4a, lookinng at us spending by age (and eg the enormous money usg spends on kidney dialysis for people thay mostly just die in a few years anyway), I wonder if an important reason US providers are so expensive is, we ration limited supply properly for most people but then don't ration keeping a bedridden grandma alive for 6 more months at extreme cost, cause hey, the govt pays.
> Just look at health insurance companies for a prime example: they make profit by denying claims
Despite being from Europe, I find this to be a shocking and erroneous interpretation.
Clearly, health insurances have the duty to allocate limited resources (“premiums”) across members. Denying and accepting claims is the mechanism to that end. Accepting all claims would increase premiums and reduce membership (by pricing people out). Would that an ideal state? Clearly not.
The point was not that all claims should be accepted. It's that adding a profit incentive to denials leads to worse outcomes.
Healthcare debates in the United States are difficult because so many assume that insurers have very high profit margins and that arbitrarily denying claims is the reason they have high profit margins.
If you look at the actual profit margins it’s low single digit percentages. You could eliminate profits altogether and virtually nothing would change. We even have non-profit insurers to look at
It’s strange how the high prices of drugs and services aren’t drawing the ire of people who complain about costs. Drug prices are nearly 3X higher here than international averages and doctors here also earn a lot more with in many cases fewer restrictions on prescribing or offering services than in most EU countries.
The meme that insurance company denials are generating huge profits comes mostly from the public murder of a health insurance CEO last year. For some reason people assumed that insurance companies and their profits must therefore be the core problem with high costs, without making the effort to see where the money actually goes in our health care system.
As you said, there is no health care system which does not have approval processes, deny requests deemed unnecessary, require step therapy, and establish standards of care.
> If you look at the actual profit margins it’s low single digit percentages.
Didn't I see somewhere that that's an artifact of Hollywood-style accounting? If you spin up a sub-business then have that sub-business charge high fees for services you can't live without, the main business might even be losing money!
What's indisputable is:
* in America, we pay more for less healthcare
* most of the money does not go to the doctors and nurses actually providing services
* it also does not go to research, which is funded elsewhere (assuming it keeps being funded at all)
* it's often possible to pay less for a service if you pay the provider directly rather get your insurance involved
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> If you look at the actual profit margins it’s low single digit percentages. You could eliminate profits altogether and virtually nothing would change. We even have non-profit insurers to look at
Look at administrative overhead instead of profit. People understand that there are problems with the system, and maybe they’re misattributing the problems, sure.
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they’re the obvious scapegoat so they get blamed. i’m ok with that.
the US needs a healthcare system that doesn’t have a profit motive. (Or limit it to a second, premium market)
While the critique is valid, that does not offer a path to the solution.
Utilitarism is the ruling moral philosophy, and the only possible countermeasure is externalities but that depends on an effective government which is even more unlikely that asking for ethical behavior to corporations.
That may be widely believed but there are plenty of government institutions that actually function well. Libraries are a good example.
What’s more: the belief in govt “inefficiency” is one of the hardest to overcome factors that makes it hard to build good institutions, leading to a vicious cycle.
Exactly, people who think the government is inefficient has never worked at any company of scale ever. All large organizations are inefficient.
A major problem of the US is just corruption. If people went to jail for things like congressional insider trading, we’d solve a lot of these issues.
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Public utilities and services are the default and work well in the majority of developed countries. This is true for everything from local transport to water distribution. As the joke says "universal healthcare is so difficult to get right that only all developed countries except the US have managed to put it in place".
Not to mention all the developing countries that have universal healthcare.
> Just look at health insurance companies for a prime example: they make profit by denying claims.
This has been repeated so many times that I think people don’t understand just how small the profit margins are for health insurers. Low to middle single digit percentages. As low as 2-3% in recent years, and much lower than the average S&P 500 corporation.
There are also non-profit insurance companies out there. Their rates are not appreciably different, as you’d expect after seeing how low the profit margins are in for-profit insurers.
I also think people don’t realize that countries with nationalized health care also deny procedures, have pre-approval processes, require step therapy, and will not authorize procedures they don’t believe to be medically necessary or to have enough evidence. There is no health care system in the world which will simply approve and pay for every request.
So while health insurer profit margins are convenient bogeyman, if you deleted their profits entirely from the system it wouldn’t move the needle on costs. It also wouldn’t open the floodgates for approving everything, because no health care system will allow unlimited services. The amount of excess and unnecessary care would be astronomically expensive. I do agree that we need a more robust system in place for ensuring that incorrect denials don’t happen, but health insurance profit margins are barely a blip on the overall cost of health care in the United States.
It’s a combination of high prices for services, American’s unusually high utilization of health care services, and very high rates of drug prescribing that mostly contribute to the cost. I think most Americans would be surprised to discover that a lot of nations with nationalized health care would also be restrictive in their access to many services and prescription drugs. For as much as we talk about insurance companies denying claims, Americans still get far more services and prescriptions than most of their counterparts in other countries.
i have no doubt that other countries have some problems in their healthcare systems too, but i think you are downplaying a few key points:
1) united healthcare made 90 billion dollars gross profit in the last 12mo, and that's only one health insurance company. claiming that it's not a great business at a 2-3% profit margin ignores the scale of money involved, and ignores that the customer for health insurance is truly captive.
2) you're right that america has very high prices in healthcare. doesn't it seem bad that private insurance companies are incentivized to make things cost as much as possible so they can skim that 2-3% off the top? insurance companies negotiate and set prices for services and pharmaceuticals. they now own the pharmacy benefit management companies that would normally be incentivized to negotiate for lower prices.
i would expect in a public health care system that rejects procedures, they would follow consistent guidelines and rules. american health insurance companies will arbitrarily reject a percentage of procedures that they know they should be accepting in order to keep their profit margin in the right range.
i think it's hard for me to see the argument that health insurance companies are a net-positive or even net-neutral party in the united states. i don't think it's a coincidence that we have some of the highest prices and some of the worst outcomes.
> private insurance companies are incentivized to make things cost as much as possible
> will arbitrarily reject a percentage of procedures that they know they should be accepting in order to keep their profit margin in the right range
So which one is it? Do they want to spend more or less?
> i don't think it's a coincidence that we have some of the highest prices and some of the worst outcomes.
It’s not a coincidence either that doctor compensation is one of the highest in the world.
The insurer margins can be whatever small but when the same company also owns the hospital and drug distribution it doesnt matter.
Somebody in the process makes extreme margins.
Also americans cant be at same time avoiding going to hospital because of costs and “still get far more services than most of their counterparts in other countries”
Believe it or not there are countries where there is mandatory health insurance (your employer or you or state have to pay it) and doctors dont look at costs because they dont really know them. They for sure try to not be wasteful but nobody is second guessing obviously best treatment because it costs 40% more.
> doctors dont look at costs because they dont really know them
They know enough to prescribe only the pre-approved drugs and they know that things will happen at due time when the already budgeted people and equipment are available.
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You are just making things up to fit what you already believe. We have a few huge publicly traded companies in this space that file with the SEC but reality is not what you are interested in.
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Whatever. Simply come to a decent EU country and see how much it costs you for a bad cold or a cancer. Then compare that to the same event in the US.
I've heard a horror stories about NHS and Canada's Medicare. Their systems are backed up, so treatment goes untreated for long periods of time.
Presumably healthcare professionals are performing as many surgeries as they can per day. Just because one person was denied, doesn't mean another person isn't approved.
For example, I'd rather get cancer in the USA than UK: https://www.politico.eu/article/cancer-europe-america-compar...
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I'm interested in your point, but do you have any articles backing up your statements?
Oh bloody hell.
It astounds me how so many people can have such strong opinions about systems they have so little experience with.
I've lived long term in 4 countries (Canada, USA, Japan, Germany) and have dealt extensively with the medical systems in all of them (plus some experiences in Portugal and France).
Every system has its warts, and this is the first thing that naysayers will latch onto, of course. People love to use tu-quoque as a defense mechanism. "See? They're just as bad as we are because you have to wait sometimes, and look at this extreme case right here! It's probably even WORSE than us!"
The fact is, none of the systems are really that bad (with the EXCEPTION of the American system). There's a reason why travel insurance companies have two tiers: All of the world EXCEPT America, and all of the world INCLUDING America.
Have I had to wait for a procedure in Canada? Sure, but they do a pretty decent job of triaging, so yeah outside of the HORROR STORIES (of which you can find anywhere if you dig enough), it's pretty damn good. In Japan I paid a percentage of costs (which are pretty damn reasonable). In France I actually didn't have insurance, so I had to pay FULL price when I came down with pneumonia: 50 euros for the doctor and the antibiotics. In Portugal, I caught COVID, and got treatment within 2 hours of arriving at the hospital in Lisbon.
If you haven't actually been in the medical system of another country, you don't know what you're talking about.
> If you haven't actually been in the medical system of another country, you don't know what you're talking about.
Being in the medical system doesn’t give you a leg to stand on either.
I grew up with insurance and have insurance now in the US. I’ve never had problems getting medical care and the worst year was ~$1000 out of pocket.
The conclusion from that isn’t that it’s a good system for everyone and nobody who complains knows what they are talking about. It’s that anecdotes of good or bad treatment are meaningless.
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> I also think people don’t realize that countries with nationalized health care also deny procedures, have pre-approval processes, require step therapy, and will not authorize procedures they don’t believe to be medically necessary or to have enough evidence
Lines in private medical care are shorter because people with no insurance don't get in line.
You can assert that but the US spends more while having worse outcomes.
As long as you have money or good insurance US is WAY way better than pretty much every other country in that regards.
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